M.D.C. HOLDINGS, INC. - FORM 8-K - EX-99 - EXHIBIT 99.1

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8-K - FORM 8-K - M.D.C. HOLDINGS, INC.	mdc20140728_8k.htm

Exhibit 99.1

M.D.C. HOLDINGS, INC.

News Release

M.D.C. HOLDINGS ANNOUNCES 2014 SECOND QUARTER RESULTS

DENVER, COLORADO, Tuesday, July 29, 2014. M.D.C. Holdings, Inc. (NYSE: MDC) announced results for the quarter ended June 30, 2014.

2014 Second Quarter Highlights and Comparisons to 2013 Second Quarter

●

Net income of $21.5 million, or $0.44 per diluted share vs. net income of $224.9 million, or $4.55 per diluted share

Tax expense of $12.5 million vs. tax benefit of $186.9 million, which included the reversal of a substantial portion of the deferred tax asset valuation allowance of $187.6 million, or $3.84 per share

●

Pretax income of $34.0 million vs. $38.0 million

●

Net new orders up 5% to 1,419 homes

Dollar value of net new orders of $544.8 million, up 12%

●

Ending backlog dollar value of $761.5 million vs. $784.2 million

●

Home sale revenues of $430.7 million, up 8% vs. $400.3 million

Average sales price increase of $33,600 per home, or 10%, to $372,000

Homes delivered of 1,158 down slightly from 1,183

●

Ending active community count of 159, up 14% from 140

●

Gross margin from home sales of 17.1% vs. 18.1%

Gross margin excluding interest and impairments of 21.1%* vs. 21.3%*

●

SG&A expenses as a percentage of home sale revenues of 11.6% vs. 13.0%, a 140 basis point improvement

●

Lots owned and under option of 16,706, up 13% year-over-year

Our net income for the 2014 second quarter was $21.5 million, or $0.44 per diluted share, compared to net income of $224.9 million, or $4.55 per diluted share, for the year earlier period. Our 2013 second quarter included a $187.6 million benefit from the reversal of our deferred tax asset valuation allowance, while we had no such benefit for the 2014 second quarter and recognized $12.5 million of income tax expense. Pretax income for the 2014 second quarter was $34.0 million, compared to $38.0 million for the same period in the prior year.

Larry A. Mizel, MDC’s Chairman and Chief Executive Officer, stated, “For the homebuilding industry as a whole, the spring selling season was modestly slower than a year ago, highlighting volatile conditions in the short-term as the industry continues down a broader path of long-term growth. We saw hesitation from some potential buyers, especially in the first-time buyer segment, following a significant run-up in home prices in 2013 and tepid economic trends that have persisted for much of the past year. However, our net new home orders improved year-over-year in the 2014 second quarter for the first time in five quarters on the strength of a year-over-year increase in our average active community count.”

M.D.C. HOLDINGS, INC.

Mr. Mizel continued, “Additionally, during the quarter we benefited from our prior decision to increase spec homes available for quick delivery, which supported our operations by allowing us to convert backlog to deliveries at a quicker rate than a year ago. Our increased conversion rate, coupled with a 10% increase in average selling price, helped to drive a year-over-year increase in our home sale revenues, offsetting the impact of higher land, material and labor costs. The higher revenues also helped us achieve better leverage on our overhead, as our SG&A rate dropped meaningfully year-over-year for the 2014 second quarter.”

Mr. Mizel concluded, “As the second quarter ended, we saw significant improvements in employment levels and consumer confidence, which supports our long-term view that the homebuilding industry is poised for growth in the coming years. We continue our preparations to embrace this growth, as evidenced by the 14% increase in our active subdivision count, the 13% increase in our controlled lot supply and the 20% increase in our available liquidity to $1.1 billion at the end of the quarter, all of which position us well to grow our earnings in future periods.”

Homebuilding

Home sale revenues for the 2014 second quarter increased 8% to $430.7 million, compared to $400.3 million for the prior year period. The increase in revenues resulted primarily from a 10% increase in average selling price to $372,000, as compared to $338,400 in the prior year. The increase in average selling price was due to price increases achieved during much of 2013 and a shift to higher-priced homes in certain markets.

Gross margin from home sales decreased to 17.1% from 18.1% for the year-earlier period. The decrease was due primarily to higher interest costs, cost increases from vendors and land sellers, and additional incentives offered in certain markets to spur demand in a slower homebuilding environment. Gross margin from home sales excluding interest and impairments was nearly flat from the year-earlier period at 21.1%* for the second quarter 2014, compared to 21.3%* for the 2013 second quarter.

SG&A expenses as a percentage of home sales revenues decreased by 140 basis points to 11.6% for the 2014 second quarter versus 13.0% for the same period in 2013. The improvement was the result of operating leverage created by the Company’s 8% year-over-year increase in home sale revenues, lower incentive and stock-based compensation expenses, and lower legal expenses, including a $1.4 million net legal recovery.

The dollar value of net new orders for the 2014 second quarter increased 12% to $544.8 million from the same period in 2013. The increase in net new orders was driven by a 14% increase in active communities to 159 from 140 in the same period in the prior year, which was partially offset by a slight decrease in our monthly sales absorption pace. Our cancellation rate for the 2014 second quarter was essentially flat at 18% versus 19% in the prior year second quarter.

M.D.C. HOLDINGS, INC.

We ended the 2014 second quarter with 1,886 homes in backlog with an estimated sales value of $761.5 million, compared to a backlog of 2,095 homes with an estimated sales value of $784.2 million at June 30, 2013.

Interest and other income of $4.6 million for the 2014 second quarter decreased by $5.6 million from the same period last year primarily due to lower interest income as overall cash and investment balances decreased to fund an increase in our investment in real estate inventories.

Financial Services

Income before taxes from our financial services operations for the 2014 second quarter was $6.6 million, compared to $8.2 million for the 2013 second quarter. The decrease was primarily driven by lower pretax income from our mortgage operations segment for both periods due to reduced volumes, origination income per unit and gains on loans locked and sold compared to a year ago resulting primarily from a more competitive mortgage market.

Income Taxes

During the 2014 second quarter, we recognized $12.5 million of income tax expense resulting in an effective tax rate of 36.7%. For the 2013 second quarter, we recognized a $186.9 million income tax benefit, driven almost entirely by our reversal of a substantial portion of our deferred tax asset valuation allowance.

About MDC

Since 1972, MDC's subsidiary companies have built and financed the American dream for more than 175,000 homebuyers. MDC's commitment to customer satisfaction, quality and value is reflected in each home its subsidiaries build. MDC is one of the largest homebuilders in the United States. Its subsidiaries have homebuilding operations across the country, including the metropolitan areas of Denver, Colorado Springs, Salt Lake City, Las Vegas, Phoenix, Tucson, Riverside-San Bernardino, Los Angeles, San Diego, Orange County, San Francisco Bay Area, Sacramento, Washington D.C., Baltimore, Philadelphia, Orlando, Jacksonville, South Florida and Seattle. The Company's subsidiaries also provide mortgage financing, insurance and title services, primarily for Richmond American homebuyers, through HomeAmerican Mortgage Corporation, American Home Insurance Agency, Inc. and American Home Title and Escrow Company, respectively. M.D.C. Holdings, Inc. is traded on the New York Stock Exchange under the symbol "MDC." For more information, visit www.mdcholdings.com.

M.D.C. HOLDINGS, INC.

Forward-Looking Statements

Certain statements in this release, including statements regarding our business, financial condition, results of operation, cash flows, strategies and prospects, constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among other things, (1) general economic conditions, including changes in consumer confidence, inflation or deflation and employment levels; (2) changes in business conditions experienced by the Company, including cancellation rates, net home orders, home gross margins, land and home values and subdivision counts; (3) changes in interest rates, mortgage lending programs and the availability of credit; (4) changes in the market value of the Company’s investments in marketable securities; (5) uncertainty in the mortgage lending industry, including repurchase requirements associated with HomeAmerican’s sale of mortgage loans (6) the relative stability of debt and equity markets; (7) competition; (8) the availability and cost of land and other raw materials used by the Company in its homebuilding operations; (9) the availability and cost of performance bonds and insurance covering risks associated with our business; (10) shortages and the cost of labor; (11) weather related slowdowns; (12) slow growth initiatives; (13) building moratoria; (14) governmental regulation, including the interpretation of tax, labor and environmental laws; (15) terrorist acts and other acts of war; and (16) other factors over which the Company has little or no control. Additional information about the risks and uncertainties applicable to the Company's business is contained in the Company's Form 10-Q for the quarter ended June 30, 2014, which is scheduled to be filed with the Securities and Exchange Commission today. All forward-looking statements made in this press release are made as of the date hereof, and the risk that actual results will differ materially from expectations expressed in this press release will increase with the passage of time. The Company undertakes no duty to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. However, any further disclosures made on related subjects in our subsequent filings, releases or webcasts should be consulted.

Contact:

Robert N. Martin
Vice President of Finance and Corporate Controller
1-866-424-3395 / (720) 977-3395

IR@mdch.com

*Please see “Reconciliation of Non-GAAP Financial Measures” at the end of this release.

M.D.C. HOLDINGS, INC.

Consolidated Statements of Operations and Comprehensive Income

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2014			2013			2014			2013
	(Dollars in thousands, except per share amounts)
	(Unaudited)
Homebuilding:
Home sale revenues	$	430,743		$	400,327		$	749,277		$	732,075
Land sale revenues		518			1,807			518			1,807
Total home and land sale revenues		431,261			402,134			749,795			733,882
Home cost of sales		(356,175	)		(327,927	)		(615,653	)		(602,003	)
Land cost of sales		(522	)		(1,435	)		(522	)		(1,435	)
Inventory impairments		(850	)		-			(850	)		-
Total cost of sales		(357,547	)		(329,362	)		(617,025	)		(603,438	)
Gross margin		73,714			72,772			132,770			130,444
Selling, general and administrative expenses		(49,798	)		(51,908	)		(98,140	)		(100,109	)
Interest and other income		4,613			10,200			18,162			16,749
Interest expense		-			(909	)		(685	)		(1,726	)
Other expense		(1,080	)		(366	)		(1,693	)		(722	)
Loss on early extinguishment of debt		-			-			(9,412	)		-
Homebuilding pretax income		27,449			29,789			41,002			44,636

Financial Services:
Revenues		11,491			13,884			20,714			26,390
Expenses		(5,615	)		(6,581	)		(10,539	)		(12,223	)
Interest and other income		701			920			1,489			1,795
Financial services pretax income		6,577			8,223			11,664			15,962

Income before income taxes		34,026			38,012			52,666			60,598
Benefit from (provision for) income taxes		(12,484	)		186,897			(19,620	)		186,827
Net income	$	21,542		$	224,909		$	33,046		$	247,425


Other comprehensive income (loss) related to available for sale securities, net of tax		2,327			(1,995	)		(1,719	)		540
Comprehensive income	$	23,869		$	222,914		$	31,327		$	247,965

Earnings per share:
Basic	$	0.44		$	4.60		$	0.68		$	5.06
Diluted	$	0.44		$	4.55		$	0.67		$	5.01

Weighted average common shares outstanding
Basic		48,640,979			48,478,076			48,613,521			48,410,486
Diluted		48,852,696			48,946,055			48,842,527			48,916,988

Dividends declared per share	$	0.25		$	-		$	0.50		$	-

M.D.C. HOLDINGS, INC.

Consolidated Balance Sheets

	June 30,		December 31,
	2014		2013
	(Dollars in thousands, except
	per share amounts)
	(Unaudited)
ASSETS

Homebuilding:
Cash and cash equivalents	$	100,150	$	148,634
Marketable securities		492,498		569,021
Restricted cash		2,188		2,195
Trade and other receivables		27,250		23,407
Inventories:
Housing completed or under construction		758,392		636,700
Land and land under development		837,889		774,961
Total inventories		1,596,281		1,411,661
Property and equipment, net		30,765		31,248
Deferred tax asset, net		160,872		176,262
Metropolitan district bond securities (related party)		14,291		12,729
Prepaid and other assets		65,374		53,525
Total homebuilding assets		2,489,669		2,428,682
Financial Services:
Cash and cash equivalents		29,881		50,704
Marketable securities		13,390		19,046
Mortgage loans held-for-sale, net		58,377		92,578
Other assets		5,244		4,439
Total financial services assets		106,892		166,767
Total Assets	$	2,596,561	$	2,595,449
LIABILITIES AND EQUITY
Homebuilding:
Accounts payable	$	34,266	$	15,046
Accrued liabilities		145,290		152,821
Revolving credit facility		10,000		-
Senior notes, net		1,096,112		1,095,620
Total homebuilding liabilities		1,285,668		1,263,487
Financial Services:
Accounts payable and accrued liabilities		56,086		55,639
Mortgage repurchase facility		32,198		63,074
Total financial services liabilities		88,284		118,713
Total Liabilities		1,373,952		1,382,200
Stockholders' Equity
Preferred stock, $0.01 par value; 25,000,000 shares authorized; none issued or outstanding		-		-
Common stock, $0.01 par value; 250,000,000 shares authorized; 48,816,639 and 48,788,887 issued and outstanding at June 30, 2014 and December 31, 2013, respectively		488		488
Additional paid-in-capital		910,535		908,090
Retained earnings		301,730		293,096
Accumulated other comprehensive income		9,856		11,575
Total Stockholders' Equity		1,222,609		1,213,249
Total Liabilities and Stockholders' Equity	$	2,596,561	$	2,595,449

M.D.C. HOLDINGS, INC.

Consolidated Statement of Cash Flows

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2014			2013			2014			2013
	(Dollars in thousands)
	(Unaudited)
Operating Activities:
Net income	$	21,542		$	224,909		$	33,046		$	247,425
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Loss on early extinguishment of debt		-			-			9,412			-
Stock-based compensation expense		1,258			1,838			2,550			5,214
Depreciation and amortization		999			994			1,933			2,072
Loss (gain) on sale of marketable securities		549			-			(6,356	)		-
Amortization of discount / premiums on marketable debt securities		512			804			422			1,423
Deferred income tax expense (benefit)		12,451			(187,643	)		19,554			(187,643	)
Net changes in assets and liabilities:
Restricted cash		(683	)		(153	)		7			(820	)
Trade and other receivables		302			(4,596	)		(8,409	)		(8,566	)
Mortgage loans held-for-sale		6,423			(6,034	)		34,201			27,490
Housing completed or under construction		(47,178	)		(47,469	)		(122,368	)		(56,087	)
Land and land under development		972			(93,739	)		(62,746	)		(138,509	)
Prepaid expenses and other assets		(2,734	)		(1,414	)		(9,615	)		(7,884	)
Accounts payable and accrued liabilities		30,468			21,678			12,097			(30,358	)
Net cash provided by (used in) operating activities		24,881			(90,825	)		(96,272	)		(146,243	)

Investing Activities:
Purchases of marketable securities		(25,992	)		(161,284	)		(382,279	)		(312,095	)
Maturities of marketable securities		26,065			87,015			159,789			87,015
Sales of marketable securities		20,414			92,399			306,769			137,067
Purchases of property and equipment		(809	)		(72	)		(1,354	)		(998	)
Net cash provided by (used in) investing activities		19,678			18,058			82,925			(89,011	)

Financing Activities:
Payments on mortgage repurchase facility, net		(7,142	)		7,380			(30,876	)		(27,479	)
Proceeds from issuance of senior notes		-			99,125			248,375			346,938
Repayment of senior notes		-			-			(259,118	)		-
Advances on revolving credit facility, net		10,000			-			10,000			-
Dividend payments		(12,205	)		-			(24,412	)		-
Proceeds from exercise of stock options		-			-			71			5,118
Net cash provided by (used in) financing activities		(9,347	)		106,505			(55,960	)		324,577

Net increase (decrease) in cash and cash equivalents		35,212			33,738			(69,307	)		89,323
Cash and cash equivalents:
Beginning of period		94,819			215,680			199,338			160,095
End of period	$	130,031		$	249,418		$	130,031		$	249,418

M.D.C. HOLDINGS, INC.

Homebuilding Operational Data

New Home Deliveries

	Three Months Ended June 30,
	2014						2013						% Change
	Homes		Dollar Value		Average Price		Homes		Dollar Value		Average Price		Homes			Dollar Value			Average Price
	(Dollars in thousands)
Arizona		184	$	47,413	$	257.7		130	$	30,472	$	234.4		42	%		56	%		10	%
California		143		70,898		495.8		167		61,199		366.5		(14)	%		16	%		35	%
Nevada		144		42,782		297.1		161		41,850		259.9		(11)	%		2	%		14	%
Washington		78		28,568		366.3		98		30,992		316.2		(20)	%		(8)	%		16	%
West		549		189,661		345.5		556		164,513		295.9		(1)	%		15	%		17	%
Colorado		328		132,004		402.5		309		113,320		366.7		6	%		16	%		10	%
Utah		44		14,143		321.4		59		18,643		316.0		(25)	%		(24)	%		2	%
Mountain		372		146,147		392.9		368		131,963		358.6		1	%		11	%		10	%
Maryland		81		36,351		448.8		83		35,407		426.6		(2)	%		3	%		5	%
Virginia		67		35,023		522.7		95		47,350		498.4		(29)	%		(26)	%		5	%
Florida		89		23,561		264.7		81		21,094		260.4		10	%		12	%		2	%
East		237		94,935		400.6		259		103,851		401.0		(8)	%		(9)	%		(0)	%
Total		1,158	$	430,743	$	372.0		1,183	$	400,327	$	338.4		(2)	%		8	%		10	%

	Six Months Ended June 30,
	2014						2013						% Change
	Homes		Dollar Value		Average Price		Homes		Dollar Value		Average Price		Homes			Dollar Value			Average Price
	(Dollars in thousands)
Arizona		309	$	80,085	$	259.2		270	$	63,633	$	235.7		14	%		26	%		10	%
California		235		111,998		476.6		313		110,788		354.0		(25)	%		1	%		35	%
Nevada		264		82,719		313.3		294		74,595		253.7		(10)	%		11	%		23	%
Washington		142		51,281		361.1		159		50,476		317.5		(11)	%		2	%		14	%
West		950		326,083		343.2		1,036		299,492		289.1		(8)	%		9	%		19	%
Colorado		576		225,387		391.3		613		226,808		370.0		(6)	%		(1)	%		6	%
Utah		68		21,705		319.2		126		38,532		305.8		(46)	%		(44)	%		4	%
Mountain		644		247,092		383.7		739		265,340		359.1		(13)	%		(7)	%		7	%
Maryland		158		73,256		463.6		137		57,111		416.9		15	%		28	%		11	%
Virginia		124		62,290		502.3		158		76,469		484.0		(22)	%		(19)	%		4	%
Florida		155		40,556		261.7		131		33,663		257.0		18	%		20	%		2	%
East		437		176,102		403.0		426		167,243		392.6		3	%		5	%		3	%
Total		2,031	$	749,277	$	368.9		2,201	$	732,075	$	332.6		(8)	%		2	%		11	%

M.D.C. HOLDINGS, INC.

Homebuilding Operational Data

Net New Orders

	Three Months Ended June 30,
	2014								2013								% Change
	Homes		Dollar Value		Average Price		Monthly Absorption Rate *		Homes		Dollar Value		Average Price		Monthly Absorption Rate *		Homes			Dollar Value			Average Price			Monthly Absorption Rate *
	(Dollars in thousands)
Arizona		262	$	74,051	$	282.6		2.65		196	$	48,825	$	249.1		3.84		34	%		52	%		13	%		(31)	%
California		214		101,695		475.2		4.14		196		79,196		404.1		5.23		9	%		28	%		18	%		(21)	%
Nevada		180		57,456		319.2		3.75		152		49,085		322.9		4.94		18	%		17	%		(1)	%		(24)	%
Washington		74		27,960		377.8		2.67		94		31,016		330.0		2.72		(21)	%		(10)	%		14	%		(2)	%
West		730		261,162		357.8		3.22		638		208,122		326.2		4.15		14	%		25	%		10	%		(22)	%
Colorado		410		171,001		417.1		3.67		381		143,754		377.3		3.30		8	%		19	%		11	%		11	%
Utah		55		17,517		318.5		3.06		44		14,582		331.4		2.10		25	%		20	%		(4)	%		46	%
Mountain		465		188,518		405.4		3.58		425		158,336		372.6		3.11		9	%		19	%		9	%		15	%
Maryland		77		37,877		491.9		1.71		112		53,091		474.0		1.84		(31)	%		(29)	%		4	%		(7)	%
Virginia		64		31,305		489.1		2.59		90		43,830		487.0		2.50		(29)	%		(29)	%		0	%		4	%
Florida		83		25,966		312.8		1.78		86		22,080		256.7		2.25		(3)	%		18	%		22	%		(21)	%
East		224		95,148		424.8		1.93		288		119,001		413.2		2.13		(22)	%		(20)	%		3	%		(9)	%
Total		1,419	$	544,828	$	384.0		3.00		1,351	$	485,459	$	359.3		3.18		5	%		12	%		7	%		(6)	%

	Six Months Ended June 30,
	2014								2013								% Change
	Homes		Dollar Value		Average Price		Monthly Absorption Rate *		Homes		Dollar Value		Average Price		Monthly Absorption Rate *		Homes			Dollar Value			Average Price			Monthly Absorption Rate
	(Dollars in thousands)
Arizona		453	$	127,560	$	281.6		2.50		323	$	79,760	$	246.9		3.36		40	%		60	%		14	%		(26)	%
California		367		178,119		485.3		4.12		360		140,358		389.9		4.77		2	%		27	%		24	%		(14)	%
Nevada		330		102,618		311.0		3.50		322		95,267		295.9		4.94		2	%		8	%		5	%		(29)	%
Washington		166		62,212		374.8		2.69		187		59,942		320.5		2.91		(11)	%		4	%		17	%		(8)	%
West		1,316		470,509		357.5		3.09		1,192		375,327		314.9		3.96		10	%		25	%		14	%		(22)	%
Colorado		806		333,920		414.3		3.60		799		291,343		364.6		3.40		1	%		15	%		14	%		6	%
Utah		98		32,219		328.8		2.86		109		35,179		322.7		1.99		(10)	%		(8)	%		2	%		44	%
Mountain		904		366,139		405.0		3.50		908		326,522		359.6		3.13		(0)	%		12	%		13	%		12	%
Maryland		145		69,515		479.4		1.51		202		91,526		453.1		1.76		(28)	%		(24)	%		6	%		(14)	%
Virginia		123		61,485		499.9		2.21		183		92,714		506.6		2.51		(33)	%		(34)	%		(1)	%		(12)	%
Florida		167		52,490		314.3		1.97		166		42,626		256.8		2.11		1	%		23	%		22	%		(7)	%
East		435		183,490		421.8		1.84		551		226,866		411.7		2.07		(21)	%		(19)	%		2	%		(11)	%
Total		2,655	$	1,020,138	$	384.2		2.88		2,651	$	928,715	$	350.3		3.09		0	%		10	%		10	%		(7)	%

* Calculated as total net new orders in period ÷ average active communities during period ÷ number of months in period

M.D.C. HOLDINGS, INC.

Homebuilding Operational Data

Active Subdivisions

	June 30,				%
	2014		2013		Change
Arizona		34		19		79	%
California		20		11		82	%
Nevada		16		13		23	%
Washington		8		12		(33)	%
West		78		55		42	%
Colorado		36		38		(5)	%
Utah		6		4		50	%
Mountain		42		42		0	%
Maryland		14		20		(30)	%
Virginia		8		11		(27)	%
Florida		17		12		42	%
East		39		43		(9)	%
Total		159		140		14	%
Average for quarter ended		158		142		11	%
Average for the six months ended		153		143		7	%

Backlog

	June 30,
	2014						2013						% Change
	Homes		Dollar Value		Average Price		Homes		Dollar Value		Average Price		Homes			Dollar Value			Average Price
	(Dollars in thousands)
Arizona		304	$	90,028	$	296.1		203	$	50,836	$	250.4		50	%		77	%		18	%
California		279		135,197		484.6		276		107,950		391.1		1	%		25	%		24	%
Nevada		206		66,713		323.8		232		71,488		308.1		(11)	%		(7)	%		5	%
Washington		70		26,127		373.2		107		36,118		337.6		(35)	%		(28)	%		11	%
West		859		318,065		370.3		818		266,392		325.7		5	%		19	%		14	%
Colorado		647		278,643		430.7		656		246,797		376.2		(1)	%		13	%		14	%
Utah		56		18,583		331.8		64		21,576		337.1		(13)	%		(14)	%		(2)	%
Mountain		703		297,226		422.8		720		268,373		372.7		(2)	%		11	%		13	%
Maryland		116		58,674		505.8		248		113,824		459.0		(53)	%		(48)	%		10	%
Virginia		102		49,381		484.1		210		109,180		519.9		(51)	%		(55)	%		(7)	%
Florida		106		38,120		359.6		99		26,470		267.4		7	%		44	%		34	%
East		324		146,175		451.2		557		249,474		447.9		(42)	%		(41)	%		1	%
Total		1,886	$	761,466	$	403.7		2,095	$	784,239	$	374.3		(10)	%		(3)	%		8	%

M.D.C. HOLDINGS, INC.

Homebuilding Operational Data

Homes Completed or Under Construction (WIP lots)

	June 30,				%
	2014		2013		Change
Unsold:
Completed		419		185		126	%
Under construction		725		628		15	%
Total unsold started homes		1,144		813		41	%
Sold homes under construction or completed		1,422		1,652		(14	)%
Model homes		263		207		27	%
Total homes completed or under construction		2,829		2,672		6	%

Lots Owned and Options (including homes completed or under construction)

	June 30, 2014						June 30, 2013
	Lots Owned		Lots Optioned		Total		Lots Owned		Lots Optioned		Total		Total % Change
Arizona		2,683		50		2,733		2,707		239		2,946		(7)	%
California		1,655		132		1,787		971		-		971		84	%
Nevada		1,534		434		1,968		1,573		136		1,709		15	%
Washington		756		226		982		477		141		618		59	%
West		6,628		842		7,470		5,728		516		6,244		20	%
Colorado		4,439		983		5,422		4,174		1,079		5,253		3	%
Utah		553		163		716		468		-		468		53	%
Mountain		4,992		1,146		6,138		4,642		1,079		5,721		7	%
Maryland		409		434		843		551		358		909		(7)	%
Virginia		569		499		1,068		491		284		775		38	%
Florida		803		384		1,187		648		424		1,072		11	%
East		1,781		1,317		3,098		1,690		1,066		2,756		12	%
Total		13,401		3,305		16,706		12,060		2,661		14,721		13	%

M.D.C. HOLDINGS, INC.

Reconciliations of Non-GAAP Financial Measures

Gross Margin from Homes Sales Excluding Interest and Impairments (Unaudited)

Gross Margin from Home Sales Excluding Interest and Impairments is a non-GAAP financial measures. We believe this information is meaningful as it isolates the impact that interest and impairments have on our Gross Margin from Home Sales and permits investors to make better comparisons with our competitors, who also break out and adjust gross margins in a similar fashion.

	Three Months Ended June 30,												Six Months Ended June 30,
	2014			Gross Margin %			2013			Gross Margin %			2014			Gross Margin %			2013			Gross Margin %
	(Dollars in thousands)
Gross Margin	$	73,714			17.1	%	$	72,772			18.1	%	$	132,770			17.7	%	$	130,444			17.8	%
Less: Land Sales Revenue		(518	)					(1,807	)					(518	)					(1,807	)
Add: Land Cost of Sales		522						1,435						522						1,435
Gross Margin from Home Sales		73,718			17.1	%		72,400			18.1	%		132,774			17.7	%		130,072			17.8	%
Add: Inventory Impairments		850						-						850						-
Gross Margin from Home Sales
Excluding Impairments		74,568			17.3	%		72,400			18.1	%		133,624			17.8	%		130,072			17.8	%
Add: Interest in Cost of Sales		16,522						12,680						28,246						22,554
Gross Margin from Home Sales
Excluding Impairments and Interest	$	91,090			21.1	%	$	85,080			21.3	%	$	161,870			21.6	%	$	152,626			20.8	%

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M.D.C. HOLDINGS, INC. Reports